To Reveal or Not to Reveal? The Influence of Cultural Secrecy on Discretionary Disclosure Decisions

Max Göttsche (), Stephan Küster and Tobias Steindl ()
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Max Göttsche: Catholic University of Eichstätt-Ingolstadt, Auf der Schanz 49, D-85049 Ingolstadt, Germany
Stephan Küster: Catholic University of Eichstätt-Ingolstadt, Auf der Schanz 49, D-85049 Ingolstadt, Germany
Tobias Steindl: Catholic University of Eichstätt-Ingolstadt, Auf der Schanz 49, D-85049 Ingolstadt, Germany

The International Journal of Accounting (TIJA), 2020, vol. 55, issue 03, 1-47

Abstract: Prior studies on the relationship between culture and discretionary disclosure fail to account for concurrent managerial incentives to reveal private information to the capital market. Our study extends the literature by investigating whether these managerial incentives offset the cultural influence on managers’ discretionary disclosure decisions. To this end, we exploit a setting in which managers have the discretion to influence both the quantity and quality of disclosure and can thereby either conceal or reveal private information. For a sample of European firms, we find that despite incentives to reveal private information, managers’ culturally determined preference for secrecy leads them to provide a low quantity as well as a lower quality of disclosure. Our results are robust to several sensitivity checks and demonstrate the relative importance of cultural influence on discretionary disclosure decisions.

Keywords: Culture; secrecy; discretionary disclosure; managerial decisions (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S1094406020500122

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